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2011

Other Budget Issues

Further Detail

Proposal.  In a Finance Letter dated April 13, 2011, the Department of Finance (DOF) requests $757,000 from Proposition 84 bond funds to fund a portion of the state's share of the cost of seismic repairs to the foundation of Perris Dam (part of the State Water Project [SWP]).  The total cost of the repairs is projected to be as much as $300 million, up to $20 million of which could be allocated to the state under the Davis-Dolwig Act under the Department of Water Resources’ (DWR’s) calculation of the assumed recreational component of the project. (For details of our concerns over the current process by which such cost allocations are made, please see our 2011 April Finance letter recommendation and our report “Funding Recreation at the State Water Project”.) 

Lake Perris History and Current Status. At the time of construction, the Lake Perris SWP facility was envisioned to serve both water supply and recreational purposes.  Recreational activities at Lake Perris have historically consisted of swimming, boating, fishing, and picnicking, but seismic concerns by DWR’s Division of Dam Safety resulted in the lowering of the water level at Lake Perris in 2005, hindering recreation at that site.  The repairs proposed by DWR that are the subject of this budget request would allow raising the water level at the dam and thereby restore recreational opportunities at Lake Perris to their former condition. 

Some action must be taken to resolve the seismic concerns at the site.  There are potentially significant consequences from an earthquake near the site of the dam even with the water level lowered as it is currently.  However, there are several possible alternatives for approaching repairs at this site, and the choice of repair alternative depends in part on the extent to which this SWP facility should continue to serve both recreational and water supply purposes.  For example, maintaining Lake Perris as a water supply-only project should eliminate the state's obligation under Davis-Dolwig, and may potentially be less expensive to the SWP contractors (who will be paying the bulk of the costs for the repairs) as well.  Thus, the level of recreation can impact both the cost of the repairs and the cost attributed to the state. 

What Purposes Should Lake Perris Serve? Determining the level, if any, of recreation at the site is an important policy decision that also affects the extent of the state's funding obligation at the site and should therefore involve the Legislature. (While DWR argues that there is a statutory requirement, approved by the voters, for recreation at this site, it is unclear to us whether such requirement exists.) In our view, an analysis should be conducted to determine whether the cost of having recreation at this site is justified by the recreational benefits provided.   

Legislature Lacks Information Needed to Make an Informed Policy Decision. We think that the Legislature lacks the information it needs to make an informed policy decision on this budget request. Recognizing that there are various options for making the repairs (depending on the level of recreation to be provided at the site), we think that the Legislature should be provided with a comprehensive analysis of the various repair alternatives and their associated costs (to the state and the SWP contractors) and benefits. With such information, the Legislature can evaluate which alternative most closely aligns with its policy priorities for the Lake Perris site. Such a comprehensive analysis, however, has not been conducted by the department and provided to the Legislature for its review.

Recommendation.   We therefore recommend that this budget request be denied because taking action on it is premature until a more comprehensive analysis of the costs and benefits of various repair alternatives is conducted. Such analysis is required to afford the Legislature the opportunity to make an informed policy decision about the extent of recreation at the Lake Perris site.